Under a System of Flexible Exchange Rates, an Increase in the Supply

question 147

Multiple Choice

Under a system of flexible exchange rates, an increase in the supply of foreign exchange (an increase in the demand for the dollar) will cause the

• A) dollar to appreciate.
• B) dollar to depreciate.
• C) U.S. trade deficit to decrease.
• D) U.S. inflation rate to increase.

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Definitions:

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